Backstage

On iPad 2 Launch Issues, Likely Resolutions, And The iPhone 5

By Jeremy Horwitz ● Tuesday, March 22, 2011

Several days before the iPad 2 was formally announced, and again literally hours before Apple’s special media event in San Francisco took place, we published solid information from reputable sources indicating that Apple did not have sufficient inventory for a proper launch of a new iPad. Contacts told us that the sort of massive but quiet build-up necessary for a new product launch had not yet begun, and at the rate things were going, Apple would not be in proper shape for a minimum of two weeks—quite possibly four.

It’s hard to know exactly what the folks at Apple were thinking when they announced that iPad 2 would start shipping only 9 days later, but it’s obvious in retrospect that the decision carried some unusually negative consequences. There are the obvious ones—the widespread grumbles about sell-outs at various American stores, unavailability of specific models* that customers were looking for, and lingering questions as to whether international launches would be delayed. History has shown that Apple doesn’t sweat these issues much in public, always falling back on some variation of a familiar refrain: “demand is so amazing that we’re just trying to make as many as people want.” It repeated that phrase almost verbatim in a press release this morning confirming that this Friday’s iPad 2 international launch is still largely on track.

But behind the scenes, the company knows that it has serious supply problems on its hands, and that it is not only risking a loss of customer good will with 4-week online delivery dates and uncertain in-store waits, but even further issues due to the demand that international launches and scalpers are creating. Calls for an iPad 2 Inventory Tracking Tool are becoming louder, as are complaints from users who have stood in line awaiting iPad 2 supplies that seem to keep on running out. Apple hasn’t put out its typical “one million sold” announcement yet, either, which given the scope of demand would presumably have been quite fast had the company actually had sufficient units to sell.

That Apple launched the iPad 2 before it was completely ready to do so was evident in other places, too. The company sent new window displays to stores so late that some pieces were actually being installed while customers were waiting in line for the product to launch, a rare peek behind the curtain for a company that typically delights in revealing things only when they’re finished. iPad 2 boxes—and those of the Smart Cover—shipped without any reference to the “iPad 2” name, an odd omission for the detail-obsessed company. Also, the iPad 2 Dock still hasn’t arrived in stores, possibly because of last-minute packaging changes.

Compounding these issues is the iPad 2’s screen light leak problem, which may or may not have been the last-minute production issue that was reported to be screen-related and impacting pre-release supply levels. Users who have attempted to swap modestly affected iPad 2s for fully working replacements have surprisingly found that Apple has plenty of extra iPad 2’s to go around, but the swapped units have even bigger problems than the ones they returned. Perhaps this is a sign that more obviously imperfect units wound up as replacement stock for ones that were built properly from the get-go. Maybe not.

Particularly in light of Apple’s decision to go ahead with iPad 2 launches in additional countries this week, it will be interesting to see how long the supply and production issues take to resolve. Given what’s transpired so far, we’re thinking things will ease up in some territories by May or early June, before which most of the hard-core fans will have gotten their hands on iPad 2 hardware, leaving additional inventory for mainstream customers. To fulfill most of its demand, Apple may have to hold off on offering versions of the iPad 2 that need to be customized for specific carriers—such as additional CDMA partners—in order to make as many GSM and Wi-Fi versions as possible.

(* = In light of gripes from launch day buyers who were offered Verizon CDMA iPad 2s that were available but apparently unwanted, or a color/capacity choice that wasn’t the one a person preferred, we’re really wondering whether Apple will be able to pull off an integrated GSM/CDMA iPhone 5 so that it needn’t manufacture and offer 8 different versions of the phone this year—white and black, across two capacities, and split between GSM and CDMA. Hints in the iOS 4.3 code seem to suggest that there will be separate GSM and CDMA versions, but we’d bet that Apple’s been trying as hard as possible to make a universal “worldphone” happen, and only antenna engineering challenges could stand in the way.)

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Comments

1

Good assessment. This is the first time I am interested in buying an apple product soon after its release and it baffles my mind how such a good, organized company can be so poor in logistics. Its almost unprofessional. I heard that apple used to take names and reserve iPhone and other products when supply was short but to actually have people wait in line for hours, if not all night, is crazy. After waiting for hours and not getting the model I wanted - I dont know if I would ever want to have an apple products. Yes, they are nice but seriously how could they be so awful in planning. Beats me!

Posted by mms on March 22, 2011 at 11:01 AM (CDT)

2

Finally someone is starting to complain, I am a die-hard Apple user and have been for years now. During previous launches I also bought new products right on launch day. The first Ipad I ordered online and received it the day before it sold in stores - needless to say I was delighted for the Iphone 4 launch I reserved one at the 5th Ave Apple store, stood in line late at night after work and left with my phone after about 45 minutes. Again I was happy. This time a friend tried to get one for me on the day of the launch and was unsuccessful because the store ran out after about 10% of the line had been served (half of those people didn’t get the device they came for) I went online that evening and ordered two ipads - delivery date 3 weeks later!!! Every morning I walk by an apple store and see people camping in line outside the store. It is making me sick! It may be cute during the week before launch and a few days after. But this late after the launch it’s pathetic! Apple really screwed up - and watch them blame it on Japan! They have really reduced their value as a company in my book. If there was a viable alternative and if I didn’t love my other products so much I might even consider leaving apple! To me this is evidence of the first step towards the decline of Apple to normal corporate mediocrity.

Posted by sdinkley on March 22, 2011 at 11:23 AM (CDT)

3

This may sound morbid and I apologize, but I think it’s clear that Steve is in bad shape and honestly, they may not have felt that they could wait.

Posted by Fred on March 22, 2011 at 11:25 AM (CDT)

4

I agree with the previous posters. I can’t fathom why Apple had to rush the availability of the iPad 2 a mere nine days after announcement.

Certainly it’s nice to have some lines to illustrate the popularity and demand for the product, but I can’t see a reason why a few more weeks would have mattered to get the proper supply numbers. It’s not like Motorola, Microsoft or Google were going to announce or street something that would have affected Apple.

Having no pre-orders or reservations was not a good sign in my view.

Apple’s usually really good at customer care and it’s quite unusual for them to fumble a product launch like this.

Hopefully they’ll learn from this and not have the same issues with iPhone 5 and future products.

Posted by cxc273 on March 22, 2011 at 11:39 AM (CDT)

5

Blah blah blah ,if they would have had enough at launch then people would be saying oh the demand is not so great.face it they can’t win anymore they have become the company to hate now .if you don’t like them go buy something else and stop complaining!

Posted by John on March 22, 2011 at 11:56 AM (CDT)

6

@John,

Demand is not measured by the lines outside a store and making customers miserable during the acquisition of a product. Its measured by how many they (iPad 2) were sold in a certain period of time. The issue here is SUPPLY not the DEMAND you dummy…

No one hates the company, all we are saying is that they screwed up. Simple as that!

Posted by mms on March 22, 2011 at 1:13 PM (CDT)

7

This is actually getting pretty frustrating. I have some $250 or so worth of Best Buy gift cards and “reward zone certificates” that I would like to use up, especially before the reward zone certificates expire in June. What is the best thing I can possibly think of to use them on? You got it - an iPad 2! Unfortunately, the three Best Buys in this area are plum out of all models! I am interested in a 64gig WiFi only model. I’ll take either white or black (although if given the choice, I’ll prefer the black). I can only hope they will become more available as we get into the later part of April or beginning of May. If not, than I’ll have to think of something else to use up the gift cards on (maybe a Nintendo DS 3D)

Posted by SkiBumMSP on March 22, 2011 at 11:25 PM (CDT)

8

Excellent story! No one would tolerate this from any other company. Not having enough and rushing to launch is one thing but telling us to line up every morning with no assurance of any iPad 2 availability, is absurd!

Posted by Colleen on March 23, 2011 at 12:12 AM (CDT)

9

XBOX 360, PS3, Chevy Camaro… The list is not short for products that debuted with low stock and high demand. Had Apple waited a few weeks it may have better met demand, “may” being the key word here. The truth is that if consumers were willing to wait those few extra weeks, they still have that option. Just order online and wait for the iPad 2 to come to you. Simple enough… It would be exactly the same as Apple announcing the product and then giving a street date a month away. Much like they have dome in the past.

I am certainly not saying Apple has no culpability here. They did rush. They did scramble a bit to beat some imaginary competitor to market. And they possibly underestimated the demand as well. I did. I thought the iPad 2 would be a solid, but not stellar sell. iPad 1 owners would not find enough value to upgrade and the rest of the interested consumers might wait to see how the product performed and also see what competitors would bring to the table. Maybe that was wishful thinking based on the people still sitting in lines in front of almost every Apple Store. Just order it online. Think of it like the iPad’s pre-order. It is not like you are rushing to get this before Christmas (much like the aforementioned XBOX 360 and PS3 did with late Fall releases)...

Posted by Mitch on March 23, 2011 at 11:03 AM (CDT)

10

@Colleen -

I am not aware of Apple officially requiring people to line up every day. I do know that the employees can only say that some stock “might” come in and that they do not know quantities. If people feel they need to line up and wait, that is a personal prerogative. Not an executive order…

And the consumer world has tolerated this from many other companies in the past (see my above post for just a few examples of strategic releases and manufactured demand). And again, Apple has plenty of blame here. But it is not at all shocking or absurd for a major release to trickle out this way, either by design or poor planning.

Also, keep in mind that there are more than a few people at the head of those lines simply acting as agents to buy the max two iPads and resell them on eBay, Craigslist or overseas. Many accounts of a “business man” handing out cash to multiple “buyers” that then gobble up nearly all of the limited stock. Is it wrong? No, this is a free market economy. Does it suck? Yes! Especially for those first few “real” customers that get left out in the cold when the stock dries up.

Posted by Mitch on March 23, 2011 at 11:16 AM (CDT)

11

The thing is, this is nothing new for Apple. I can remember waiting a month to get a 1G iPod mini, and scrabbling at hitting up the shops on the day they got their shipments to get a second one for my wife after she decided I wasn’t so crazy after all spending $250 on a music player.

Apple does this because whatever grumbling and complaining that is going on right now will fade to a faint background hiss in people’s minds, but everyone is going to remember all the hullabaloo about yet another Apple product launch.

It’s not an accident. It creates desire, it creates hype. It reaches into the minds of those who aren’t even all that into the product (yet) to create the notion that the iPad 2 must really be something, have you seen the news stories about people lining up for days to get one? And they get all this bonus marketing and campaigning, essentially, for free. It’s not like the people who are doing the grumbling and lining up are going to go buy a Xoom, so Apple will get their money in due time and they’ll also get the money from a lot more people down the road who will think to themselves come July, “omigod, they’re finally in stock, I must buy one NOW!”.

Posted by Code Monkey in Midstate New York on March 23, 2011 at 11:37 AM (CDT)

12

Generally speaking, I don’t think or post things like this, but this thread is truly sad.
With all the problems in the world right now, you people are really this upset over a freakin’ iPad?
Wow. Just wow.
I truly hope you’re never faced with real tragedy any time soon - I fear your ancestors would turn in their graves thinking what has become of the human race…

Posted by sb on March 23, 2011 at 12:40 PM (CDT)

13

Waaaaaaaaah!!! It’s not like you’re getting in line for bread and water. Doesn’t anyone(Americans) have any patience any longer? No is the correct answer.

Posted by solar on March 23, 2011 at 3:22 PM (CDT)

14

My biggest beef with Apple product launches is the inconsistency from year to year (or product to product, as the case may be). As you accurately stated, Jeremy, Apple’s success in the Jobs era can be attributed to an almost laserlike attention to detail. But launches have been sort of haphazard, to wit:

1. iPhone, 2007. No preorder, no carrier subsidy, and no online availability at the outset. You could only acquire the iPhone by waiting in hellacious lines at brick-and-mortar Apple and AT&T locations, although you could activate at home, which was nice.

2. iPhone 3G, 2008. A little bit more organized on the whole, but still offered in stores only and the online activation went by the wayside. Serious activation issues did plague many folks, however.

3. iPad, 2010. Online preordering was allowed and it was seemingly well-implemented. No need for long lines at stores. But of course, this was an untested product line with what seemed to be, at the time, a more limited marketability than the iPhone. Sales of the device show that it is indeed quite popular.

4. iPhone 4, 2010. Online ordering was available, and it was a total mess. Both AT&T and Apple sites crapped out at various times. I got mine pretty quickly through AT&T but I was fortunate.

5. iPad 2, 2011. No preordering, wide array of stores have it at launch. But by catering to the Best Buys and Targets, a thin initial supply was spread even thinner, and people were walking into stores that weren’t prepared to deal with the demand or able to inform the customers as to their stock or their lack thereof.

Again, Apple is going to sell out of its iDevices at launch. That much is abundantly clear. But over the past four years, we’ve seen Friday evening sales, Thursday morning preorders, some stores get what others do not, configurations become overly complicated, etc. It’s as if Apple wants to keep trying to reinvent a wheel that has proven to be missing a few spokes or running flat every time around.

Stick with a day of the week and a time. Supply the brick-and-mortar stores amply and make preorders available (or not) for each product. Don’t deviate from a fairly flexible, but at least established, set of new release guidelines. Lines and the occasional activation hiccups can be expected due to the volume of interest, but for Pete’s sake (or rather, Steve’s, I suppose), stop changing the format each time. Otherwise, these kinds of disasters, small-scale as they may ultimately prove to be, will continue to occur.

Posted by Flippy Hambone on March 23, 2011 at 3:44 PM (CDT)

15

Living in Italy it’s often necessary to wait longer and even pay more for popular products. Short supply for ipad 2 is not a surprise. If the launch was premature, I imagine competitive strategy was at play. If parts are unavailable, I suppose we can blame the Tsunami in Japan. If Apple just wanted to create demand excitement, it’s naughty but harmless if not exaggerated.

Where there would be cause for concern is in the case of poor production standards calling for callbacks and cancelled shipments. I have virtually all Apple’s products and they work - but in the 3 cases I have needed support the source has been the screen - Powerbook 17”, iPhone 32gb 3G and a Macbook White. An odd coincidence.

My Powerbook screen fault remains because Apple just didn’t want to spend money fixing it (a well known fault of coloured vertical lines affecting machines of certain batches from a specific Chinese factory).

If Apple has an unattractive side in it’s glorious advance, it’s that the rate of reaching legacy status has been augmented radically. Between chips, the OS and physical spec designs even serious home users need to manage software and hardware configurations carefully to avoid losing the use of some key (non Apple) software packages.

Business goes in cycles. Apple is making growth history and redefining the human - computing interface but customers are fickle and competitors are not all laggards. I sincerely hope that production quality, after sales care and defective product replacement remain high priorities. Otherwise the shine will go off the Apple.